IDEAS home Printed from https://ideas.repec.org/p/sek/iacpro/5908306.html
   My bibliography  Save this paper

Optimal Capital and Labor Investment in Price Regulated State Economic Service Enterprises

Author

Listed:
  • Mustafa akan

    (Do?u? University)

Abstract

Investment behavior of a price regulated service firm facing fluctuating demand is investigated with a Cobb-Douglas type of production function using optimal control theoretic model. Both machinery and labor are assumed to be capital goods. Rates of change of demand, attrition rate of labor and the depreciation rate of capital are the primary parameters determining optimal investment behavior. Switching times between four phases of investment where (1) both labor and capital investment are positive, (2) capital investment is zero but labor investment is positive,(3) capital investment is zero but labor investment is positive and (4) where both investments are zero are identified. The same analysis is repeated using Constant Elasticity of Substitution (CES) type of production function.

Suggested Citation

  • Mustafa akan, 2017. "Optimal Capital and Labor Investment in Price Regulated State Economic Service Enterprises," Proceedings of International Academic Conferences 5908306, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iacpro:5908306
    as

    Download full text from publisher

    File URL: https://iises.net/proceedings/34th-international-academic-conference-florence/table-of-content/detail?cid=59&iid=004&rid=8306
    File Function: First version, 2017
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Murray Brown, 1967. "Introduction to "The Theory and Empirical Analysis of Production"," NBER Chapters, in: The Theory and Empirical Analysis of Production, pages 3-13, National Bureau of Economic Research, Inc.
    2. Murray Brown, 1967. "The Theory and Empirical Analysis of Production," NBER Books, National Bureau of Economic Research, Inc, number brow67-1, March.
    3. van de Klundert, T.C.M.J. & David, P.A., 1965. "Biased Efficiency Growth and Capital-Labor Substitution in the U.S., 1899-1960Biased Efficiency Growth and Capital-Labor Substitution in the U.S., 1899-1960," Other publications TiSEM 049dd3c3-8689-4ac6-9e72-7, Tilburg University, School of Economics and Management.
    4. Rainer Klump & Harald Preissler, 2000. "CES Production Functions and Economic Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 41-56, March.
    5. Cristina Barceló, 2007. "A Q-model of labour demand," Investigaciones Economicas, Fundación SEPI, vol. 31(1), pages 43-78, January.
    6. Sebastian Gechert & Thomas Havranek & Zuzana Irsova & Dominika Kolcunova, 2019. "Death to the Cobb-Douglas Production Function," FMM Working Paper 51-2019, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    7. Walter Y. Oi, 1962. "Labor as a Quasi-Fixed Factor," Journal of Political Economy, University of Chicago Press, vol. 70, pages 538-538.
    8. Herve Guyomard, 1988. "Quasi-fixed factors and production theory : the case of self-employed labour in French Agriculture [Facteurs quasi-fixes et théorie de la production ; le cas du travail familial dans l'agriculture ," Post-Print hal-02718615, HAL.
    9. Lagomarsino, Elena, 2020. "Estimating elasticities of substitution with nested CES production functions: Where do we stand?," Energy Economics, Elsevier, vol. 88(C).
    10. Hiroki Tsurumi, 1971. "Suboptimization Model of Demand for Investment and Labor: An Optimal Control Theoretic Approach," Working Paper 45, Economics Department, Queen's University.
    11. Andrew B. Abel, 1981. "A Dynamic Model of Investment and Capacity Utilization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 96(3), pages 379-403.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marijke J. D. Bos & Gonzague Vannoorenberghe, 2018. "Total factor productivity spillovers from trade reforms in India," Canadian Journal of Economics, Canadian Economics Association, vol. 51(2), pages 549-606, May.
    2. Edward Wolff, 1997. "Spillovers, Linkages and Technical Change," Economic Systems Research, Taylor & Francis Journals, vol. 9(1), pages 9-23.
    3. Rainer Klump & Peter McAdam & Alpo Willman, 2012. "The Normalized Ces Production Function: Theory And Empirics," Journal of Economic Surveys, Wiley Blackwell, vol. 26(5), pages 769-799, December.
    4. McAdam, Peter & Willman, Alpo & León-Ledesma, Miguel A., 2010. "In dubio pro CES - Supply estimation with mis-specified technical change," Working Paper Series 1175, European Central Bank.
    5. Benjamin Klotz & Rey Madoo & Reed Hansen, 1980. "A Study of High and Low "Labor Productivity" Establishments in US Manufacturing," NBER Chapters, in: New Developments in Productivity Measurement and Analysis, pages 239-292, National Bureau of Economic Research, Inc.
    6. Miguel A. León-Ledesma & Peter McAdam & Alpo Willman, 2010. "Identifying the Elasticity of Substitution with Biased Technical Change," American Economic Review, American Economic Association, vol. 100(4), pages 1330-1357, September.
    7. Koester, U., 1972. "Faktormobilität und Faktorentlohnung in einer wachsenden Volkswirtschaft unter besonderer Berücksichtigung des technischen Fortschritts," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 9.
    8. Knoblach, Michael & Rößler, Martin & Zwerschke, Patrick, 2016. "The Elasticity of Factor Substitution Between Capital and Labor in the U.S. Economy: A Meta-Regression Analysis," CEPIE Working Papers 03/16, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    9. Grégory LEVIEUGE & Cristina BADARAU-SEMENESCU, 2010. "Which policy-mix to mitigate the effects of the financial heterogeneity in a monetary union?," EcoMod2010 259600105, EcoMod.
    10. Carvalho, José L. & Haddad, Cláudio L. S., 1978. "Distorções no mercado de fatores: comércio internacional e emprego reconsiderado," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 32(2), April.
    11. Gajdzik, Bożena & Gawlik, Remigiusz, 2018. "Choosing the Production Function Model for an Optimal Measurement of the Restructuring Efficiency of the Polish Metallurgical Sector in Years 2000–2015," MPRA Paper 83618, University Library of Munich, Germany.
    12. Klump, Rainer & McAdam, Peter & Willman, Alpo, 2008. "Unwrapping some euro area growth puzzles: Factor substitution, productivity and unemployment," Journal of Macroeconomics, Elsevier, vol. 30(2), pages 645-666, June.
    13. Zvi Griliches, 1998. "Introduction to "R&D and Productivity: The Econometric Evidence"," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 1-14, National Bureau of Economic Research, Inc.
    14. Sandro Montresor & Giuseppe Vittucci Marzetti, 2008. "Innovation Clusters in Technological Systems: A Network Analysis of 15 OECD Countries for the Mid-1990s," Industry and Innovation, Taylor & Francis Journals, vol. 15(3), pages 321-346.
    15. Itxaso del-Palacio & Francesc Sole & Jasmina Berbegal, 2010. "Which services support research activities at universities?," The Service Industries Journal, Taylor & Francis Journals, vol. 31(1), pages 39-58, February.
    16. Kawai, Eizo, 2001. "Re-examination of wage, employment, and hours adjustments: what is crucial for differences in the adjustments?," Japan and the World Economy, Elsevier, vol. 13(4), pages 483-497, December.
    17. Lloyd Ulman, 1992. "Why Should Human Resource Managers Pay High Wages?," British Journal of Industrial Relations, London School of Economics, vol. 30(2), pages 177-212, June.
    18. Charles A.E. Goodhart & Dimitrios P. Tsomocos & Xuan Wang, 2023. "Support for small businesses amid COVID‐19," Economica, London School of Economics and Political Science, vol. 90(358), pages 612-652, April.
    19. Dmitriy Stolyarov & Boyan Jovanovic, 2000. "Optimal Adoption of Complementary Technologies," American Economic Review, American Economic Association, vol. 90(1), pages 15-29, March.
    20. J. David Brown & John S. Earle, 2002. "Job Reallocation and Productivity Growth under Alternative Economic Systems and Policies: Evidence from the Soviet Transition," CERT Discussion Papers 0208, Centre for Economic Reform and Transformation, Heriot Watt University.

    More about this item

    Keywords

    Optimal Control Theory; Investment; Service Companies;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sek:iacpro:5908306. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klara Cermakova (email available below). General contact details of provider: https://iises.net/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.